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Pennies from heaven on B'way: theater owners get air rights windfall.

Creating a potentially huge windfall of cash for Broadway's theater owners, the New York City Council voted Aug. 6 to allow the sale of 25 Broadway houses' "air rights" for use in the Chelsea and Clinton areas. The move angered community groups, who fear rising rents and a change in the character of their neighborhoods.

Air rights represent the difference between a theater building's actual size and the size allowed under Gotham zoning regulations. As most theaters are not very tall, they've got stories to burn -- and now, it seems, to sell to developers at $50 a square foot. The concession had long been sought by the theater owners.

The resolution will allow the owners to sell rights to developers that will increase the size of buildings in the area by as much as 20% without a permit, and as much as 40% with a special permit and review.

While theater owners are thrilled, many in the Chelsea and Clinton communities in the affected areas aren't.

"We're entirely displeased," said a resigned Pamela Harriman, chair of Community Board 4 in Chelsea.

The City Council elected not to demand an environmental impact statement for the proposal, which would have examined the effects of increased construction, pedestrian and auto traffic, noise and pollution in the area in question, between 40th and 57th streets, between Sixth and Eighth avenues.

"When you have an area where building could be increased by 20% or higher, that seems like a good reason to study it," added Harriman.

Theater owners weren't looking a gift horse in the mouth. They stand to make millions on the sale of the air rights.

With a total of 2 million square feet up for potential sale at a price pegged at $50 per square foot, the total figure for the rights could reach $100 million, most of which goes straight into the pockets of the theater owners.

"They are professionals, and who am I to criticize their decision?" asked Shubert Organization president Phil Smith.

Indeed, the Shubert Organization stands to gain most, with 12 of its houses affected by the ruling and an aggregate 1.1 million square feet now up for potential sale.

Some residents criticized theater owners for contributions to Mayor Rudolph Giuliani, who initially proposed the plan in December.

In fact, the Nederlander Organization contributed over $44,000 to Giuliani's campaign in the 1997 election cycle, according to documents obtained by Variety from New York's Campaign Finance Board. Calls placed to Nederlander officials and execs at Jujamcyn, the city's third major theater owner, were not returned.

But defenders of the plan point to its potential as a booster of theater, not just theater owners. The Giuliani administration promoted the plan as a private-sector means of preserving the Broadway theaters and increasing the number of productions per year.

As part of the legislation, the theater owners must contribute $10 per square foot of air rights sold to the Broadway Initiative, a nonprofit coalition that plans to use the money for audience development and for funding new plays and small musicals.

And the Broadway houses that sell their air rights must guarantee that they will remain legitimate theater houses for at least 25 years.

The creation of plays and musicals through the Broadway Initiative has been touted as the legislation's chief public interest.

But it is also a source of intense debate. How will the Broadway Initiative fund its targeted $10-million-a-year budget? Only a small part of the money will come from the sale of the air fights; indeed the total potential funding from air rights sales is only $20 million. The greater part is slated to come from contributions from unions, guilds and producers, as well as fundraising efforts on the part of the Initiative.

But it's not clear how willing the unions and producers will be to contribute to the fund, or how much they'll ante up.

"Everybody knows that they're going to have to belly up to the bar," says Barbara Hauptman, executive director of the Society of Stage Directors and Choreographers, the union representing the theater's 1,400 directors and choreographers. "But how much? It's too early to tell."

The reaction was similar at the United Scenic Designers Local 829.

"I don't know what's going to happen," says Paul Moore, the national business director. "We support it in principle, but it's up to the union membership and board to decide how much."

Some producers argued that the theater owners' take was too generous a portion.

"I wish we could be getting more than $10 a square foot," says Roger Berlind, a producer who ostensibly could benefit from the fund for production money but may also be called upon to contribute to it.

And there were some naysayers on the City Council, which voted 32 to six to approve the measure.

City Councilman Sheldon Leffler, who voted against it, said, "This translates into a windfall for the theater owners without a commensurate commitment to a return of the profits back into the theater industry. The way this is right now, a theater owner could buy a villa in Southern France."

But despite its ultimate victory, the legislation did see some changes en route. The Manhattan Borough Board voted in April to temporarily derail the proposal and add some safeguards. First, the low-rise areas on the west side of Eighth Avenue between 45th and 57th streets would be exempt from air fights transfers.

Second, a committee staffed by city government officials and arts representatives called the Theater Subdistrict Council will monitor the disbursement of the funds to the Broadway Initiative and make sure that theaters are inspected and maintained.

Sixteen-year Hell's Kitchen denizen Christina Boers said that a lawsuit appealing the vote is still possible. She said that rents are already on the rise, and the luxury apartments that developers will likely bring with them will force her and other residents out.
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Title Annotation:win relaxation of New York City zoning restrictions on expansion
Author:Brodesseur, Claude
Date:Aug 10, 1998
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